5/1989 VALA 1989 - Amendments to DSHA 1918

AMENDMENTS TO THE DSH ACT 1918

Purpose

The purpose of this instruction is to explain the amendments made by the Veterans' Affairs Legislation Amendment Act 1989 (the VALA Act) and the Defence Service Homes Amendment Act 1989 (the DSH Amending Act), to the following sections of the Defence Service Homes Act 1918 (the DSH Act):

C. section 19 Certificate of entitlement not to be issued in certain other cases

D. section 50B(5)(a) and (b) Annual report.

A. Sub-section 4(1) - Interpretation - "Australian soldier"

The VALA Act amends the definition of "Australian soldier" in section 4 of the DSH Act to include in new paragraph (ga) any person who, as a member of the Australian Defence Force, renders service as a member of the United Nations Transition Assistance Group, Namibia (UNTAG), in the area described in the new item 9 of Schedule 2 of the Veterans' Entitlements Act (VEA), during the period specified in the item.

The area in which service as a member of UNTAG must have been rendered for the purpose of DSH and VEA entitlements is the area comprising the United Nations Mandated Territory of Namibia and the area of land extending 400 kilometres outwards from the borders of Namibia into the adjoining countries of Angola, Zambia, Zimbabwe, Botswana and South Africa (including Walvis Bay). The service in that area must have been rendered on or after 18 February 1989.

The effect of the amendment of the definition of "Australian soldier" is to define as an "Australian soldier" any person who satisfies the requirements of the new paragraph (ga). Any such person is entitled to assistance under the DSH Act on the same basis as any other person who satisfies the definition of "Australian soldier".

Sub-section 4(1) of the Act is amended to clarify the definitions of "further advance" and "initial advance".

The new definitions clarify the effect of any previous assistance under the Act on the status of a person again applying for assistance and make clear the position of an applicant for assistance who is or was the personal representative (executor or administrator) of a deceased assisted person.

The two definitions as previously drafted would seem to have allowed the possibility of a person who received a loan from the Defence Service Homes Corporation, and discharged the loan before the vesting of mortgages with Westpac, to apply for and receive an initial advance of $25,000. This is contrary to the intention of the Act which is that, generally, such persons should be able to re-borrow as a further advance only the balance of the previous loan which was outstanding immediately before it was discharged. This intention is restored by the new definitions which make it clear that a subsidised advance to a person not previously assisted is an initial advance while an advance to a previously assisted person is a further advance.

The previous definitions also had the effect of conferring the status of "purchaser" or "borrower" on the personal representative (executor or administrator) of the deceased estate of a purchaser or borrower, respectively. This meant that a personal representative applying for the first time for DSH assistance in his or her own right nevertheless would have to have been treated as having received previous assistance. On this interpretation, such an applicant would not have been able to receive an initial advance. The new definitions make it clear that an eligible person is able to utilise his or her entitlement to assistance under the Act without being affected by any present or past status that person may have or have had as the personal representative in the estate of a deceased eligible purchaser or borrower.

The date of effect of these amendments is 19 December 1988.

C. Section 19 - Certificate of entitlement not to be issued in certain other cases

Section 19 has been amended to clearly identify the categories of persons for whom Ministerial approval of second assistance is required.

Under the previous provisions it was arguable that the Act did not require that Ministerial approval be obtained for the re-use of the balance of a DSH loan to purchase a new home where the loan in question had been discharged before the vesting in Westpac. The Act also seemed to require any person who has received Ministerial approval for the re-use of the balance of a DSH loan to seek such approval again for any subsequent use of any remaining balance of the loan. Neither of these possible interpretations was intended.

Section 19 now provides clearly that the Minister's approval of the issue of a certificate in relation to a further advance is required in any case where the applicant:

is or was at any time a purchaser or borrower as defined in section 4 of the Act (as in force before, on or after 19 December 1988), otherwise than merely by being the personal representative of one; or

converted a contract of sale into a Corporation advance under the old sub-section 19(6) or into an initial advance under the new section 37; and

has not received a Corporation advance after 9 December 1987 for a term of 25 years or less or an initial advance or a further advance.

This means that any person who was assisted on or before 9 December 1987 (and in some cases of grants of non-portable 32 year loans and contract of sale conversions, after that date) and has not subsequently received section 19 approval of further assistance, must obtain such approval before a further advance can be authorised. It also means that any person who is assisted after 9 December 1987 (excluding grants of 32 year loans and contract of sale conversions) is exempt from the requirement to obtain section 19 approval of any further advance.

The date of effect of the amendment of section 19 is 19 December 1988.

D. Section 50B.paragraphs (5) (a) and (5) (b) - Annual Report

Section 50B is amended by omitting from paragraphs (5)(a) and (5)(b) the word "financial".

The amendments ensure that the provisions are consistent with similar provisions contained in other Commonwealth legislation - principally sub-section 63(1) of the Audit Act 1901. This will enable the Auditor-General to be satisfied that financial statements included in annual reports submitted under the Act are based on proper "accounts and records" not just "accounts and financial records".

The attached amendments to the General Orders cover the following matters:

the extension of eligibility for assistance under the Act to members of the Australian Defence Force who serve in Namibia;

the changes concerning Ministerial approval of second assistance made to section 19 of the Act by the Defence Service Homes Amendment Act 1989; and

rationalisation of the terms used in the General Orders relating to further advances.

The terms used in the General Orders in relation to further advances and their meanings are as follows:

further advance - as defined in section 4 of the Act;

section 19 further advance - a further advance approved by the Minister or his delegate under section 19 of the Act;

second assistance - a section 19 further advance to a person who has previously received only initial assistance;

third or subsequent assistance - a section 19 further advance to a person who has previously received second or subsequent assistance;

unrestricted further advance - a further advance to a person seeking to re-borrow the balance of a portable advance (i.e. where Ministerial approval under section 19 is not required).

Replacement pages for unofficial loose-leaf copies of the legislation and General Orders Replacement Page Issue No. 3 are attached.

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Important legislative change

As a result of this legislative change, the Department is updating its published information, including hardcopy and website content, as well as CLIK. While this process is well underway, it will take some time before all changes are complete. In the meantime, references within CLIK to the Safety, Rehabilitation and Compensation Act 1988 or SRCA should now generally be understood to be references to the new DRCA (with the exception of intended historical references to SRCA). It is important to note that the same provision references (i.e., sections, subsections and paragraphs) from the SRCA have been retained in the DRCA.